Event Title

A Review of Evaluation Methodology and the Microeconomic Empirical Studies

Session

Management, Business and Economics

Description

This study will provide an assessment of the methodology applied in evaluating Active Labour Market Policies (ALMP). The aim of this study is to: (i) analyse the evaluation methodologies employed in microeconomic policy analysis and identify the key assumptions within the common frameworks; and (ii) review the empirical evidence specifically for European transition economies. The key role of this study is to examine the evaluation problem and the construction of counterfactuals for the reliability of the results. It is crucial to understand whether a particular active programme has been successfully designed, targeted and implemented and at the same time to evaluate the impact of ALMPs on the participants‘ future labour market outcomes. The evaluation analysis becomes even more difficult in a quickly changing environment, which is the case in most transition economies. According to Heckman et al. (1999), the choice of the most appropriate estimator depends on three factors: the assignment of individuals into the programmes, the quality of data available and the specific question to be answered. In social experiments the assignment of the participants into the programmes is performed randomly, hopefully assuring balance in observed and un-observed characteristics of the treated and control persons i.e., the characteristics of the two groups are similar hence comparable (Heckman et al., 1996; 1999). In contrast, in observational studies the assignment into the programmes is not random and thus causes possible selection bias. Choosing from the wide range of available evaluation methods when analysing the microeconomic effectiveness of active policies is a big challenge for researchers. This study provides an explanation of the evaluation problem, with particular emphasis given to the construction of the counterfactuals which provides arguments for using Propensity Score Matching and more specifically how this method may correct for any selection bias followed by an assessment of the efficiency of different matching methods.

Keywords:

ALMP, evaluation, PSM, unemployment

Proceedings Editor

Edmond Hajrizi

ISBN

978-9951-550-47-5

Location

UBT Kampus, Lipjan

Start Date

30-10-2021 12:00 AM

End Date

30-10-2021 12:00 AM

DOI

10.33107/ubt-ic.2021.522

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Oct 30th, 12:00 AM Oct 30th, 12:00 AM

A Review of Evaluation Methodology and the Microeconomic Empirical Studies

UBT Kampus, Lipjan

This study will provide an assessment of the methodology applied in evaluating Active Labour Market Policies (ALMP). The aim of this study is to: (i) analyse the evaluation methodologies employed in microeconomic policy analysis and identify the key assumptions within the common frameworks; and (ii) review the empirical evidence specifically for European transition economies. The key role of this study is to examine the evaluation problem and the construction of counterfactuals for the reliability of the results. It is crucial to understand whether a particular active programme has been successfully designed, targeted and implemented and at the same time to evaluate the impact of ALMPs on the participants‘ future labour market outcomes. The evaluation analysis becomes even more difficult in a quickly changing environment, which is the case in most transition economies. According to Heckman et al. (1999), the choice of the most appropriate estimator depends on three factors: the assignment of individuals into the programmes, the quality of data available and the specific question to be answered. In social experiments the assignment of the participants into the programmes is performed randomly, hopefully assuring balance in observed and un-observed characteristics of the treated and control persons i.e., the characteristics of the two groups are similar hence comparable (Heckman et al., 1996; 1999). In contrast, in observational studies the assignment into the programmes is not random and thus causes possible selection bias. Choosing from the wide range of available evaluation methods when analysing the microeconomic effectiveness of active policies is a big challenge for researchers. This study provides an explanation of the evaluation problem, with particular emphasis given to the construction of the counterfactuals which provides arguments for using Propensity Score Matching and more specifically how this method may correct for any selection bias followed by an assessment of the efficiency of different matching methods.